June 12, 2006

 

US Wheat Outlook on Monday: Up 3-5 cents following overnight gains

 

 

U.S. wheat futures were called to open up 3-5 cents Monday following firm overnight trade and on calls for a higher open in CBOT corn and soybean futures due to U.S. Midwest weather worries, brokers said.

 

"U.S. wheat harvest pressure should limit gains," said Terry Reilly, a grain analyst at Citigroup.

 

Both the hard red winter and soft red winter wheat crops are currently being harvested in the U.S.

 

Reilly also noted calls for opening losses in precious metal futures Monday could limit gains in U.S. wheat futures.

 

In the overnight e-CBOT session, most-active July wheat closed up 5 cents at US$3.77 1/2 per bushel.

 

"Prices Friday closed lower, near the session low, at the weekly low close, at a fresh four-week low close and scored a bearish "outside day" down on the daily bar chart," a technical source said. "However, prices look to rebound strongly today. However, it still appears a near-term market top is in place. It will take a close back above resistance at US$4.00 to provide the bulls with fresh upside technical momentum."

 

First resistance for CBOT July wheat was seen at US$3.80 and then at US$3.85. First support was put at US$3.71 - Friday's low - and then at US$3.68.

 

Kansas City Board of Trade July wheat ended overnight up 6 1/2 cents at US$4.85 1/2 per bushel.

 

"The next downside objective for the bears is closing prices below support at last week's low of US$4.74," the technical source said. "It will take a close back above major psychological resistance at US$5.00 a bushel to provide the bulls with fresh upside technical momentum."

 

First resistance for KCBT July wheat was seen at US$4.87 1/2 and then at US$4.95. First support was seen at US$4.74--last week's low--and then at US$4.71 1/2.

 

The CFTC reported Friday that speculators in CBOT wheat futures and options combined for the week ended June 9 were long 108,036 lots, down 13,913 contracts from the week before, and short 72,700 contracts, down 2,116 lots from the previous week.

 

For KCBT wheat futures and options combined, speculators were long 57,939 lots, down 27 contracts, and short 4,389 contracts, down 299 lots from the previous week.

 

For MGE spring wheat futures and options combined, speculators were long 18,430 contracts, up 1,015 lots, and short 452 contracts, up 12 contracts.

 

Cash U.S. hard red winter wheat basis bids were mostly steady Monday except for a 13-cent gain in Manhattan, Kan.; soft red winter wheat basis bids were mixed, with a 6 cent gain in the Kansas City truck bid and a 3-cent loss in Memphis; and spring wheat basis bids were mostly steady to firm, grain merchandisers said.

 

U.S. wheat traders noted that India had issued a tender for 2.3 million tonnes of wheat.

 

Weather-related worries about some overseas wheat crops, notably those in India and China, were also seen as supportive to U.S. wheat futures on Monday, brokers said.

 

The U.S. Department of Agriculture is scheduled to release its weekly U.S. export inspections data at 10:00 a.m. CDT and its weekly U.S. crop progress report at 3:00 p.m. CDT.